A day after Treasury Secretary Scott Bessent said he has “information that the market doesn’t have” about Japan, he called Bank of Japan Governor Kazuo Ueda his “longtime friend” during a meeting at the G20 finance ministers’ summit, as Japan’s 10-year bond yield climbed to its highest level in three decades.
U.S.-Japan Coordination Remains ‘Close’
“I was delighted to welcome my longtime friend, Bank of Japan Governor Kazuo Ueda, to the beautiful Blue Ridge Mountains for the G20 Finance Ministers and Central Bank Governors Meetings,” Bessent said in a post on X Tuesday.
The Treasury Department said in a statement that Bessent “expressed strong support for Japan’s decisive market and monetary steps to address the substantial undervaluation of the yen.”
He also stressed the importance of “sound formulation and communication of monetary policy to anchor inflation expectations and avoid excess exchange rate volatility.”
Speaking separately to CNBC on Monday, Bessent said he has “information that the market doesn’t have” and believes the Japanese government and BOJ “will do the things that will lead to a stronger yen.”
Schiff Says This Is Just the Beginning
Investor Peter Schiff warned that Japan’s yield spike is only a preview of a larger problem still to come.
Japan’s benchmark 10-year yield touched 3.003% on Tuesday to a three-decade high.
“I forecast this on my podcast when the BOJ drew a line in the sand at 50 basis points. This is a huge problem for Japan, but a harbinger of an even bigger problem for the U.S.”
Coordinated Yen Intervention
The U.S. and Japan jointly intervened in currency markets on July 31, after the yen fell past 163 to the dollar, its weakest level in nearly four decades.
The yen has since recovered a little, trading at 160.35 per dollar at the time of writing.
Interest Rates Under Pressure on Both Sides of the Pacific
The Bank of Japan has raised its benchmark rate roughly twice a year under the tightening cycle it began in 2024, most recently lifting it to 1% in June, its highest level since 1995.
In the U.S., the 10-year Treasury yield climbed to 4.78% on Tuesday, marking a fifth straight session at its highest level since January 2025.
Markets now price in roughly a 68% probability of a 25-basis-point Federal Reserve rate hike this month.
Price Action: The State Street SPDR S&P 500 ETF Trust (NYSE:SPY) closed 0.69% lower on Tuesday at $761.78 and fell 0.02% in extended trading, while Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) closed 1.27% lower at $707.64 and rose 0.03% in after-hours trading.
Benzinga edge rankings indicate State Street ETF has a Momentum score in the 65th percentile and a positive price trend across the short, medium, and long-term.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock/ Maxim Elramsisy
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